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China Market Review 3 April , 2017

Crude Oil Market ReviewThe international crude oil price was stable-to-higher this week. Crude oil prices showed signs of stabilization after reaching $48/bbl early this week, despite players’ bearish sentiments. Two major oilfields in Libya were shut down unexpectedly due to the instability. The EIA report released positive signals. The crude oil price was pushed higher. The oil producing countries, agencies and traders jointly supported to extend their oil supply-reduction pact. Bullish expectations were aroused.

Ethylene Market ReviewThe Asian ethylene prices continued decreasing this week. As of March 29, closing prices decreased by $5 to $1,139.5-1,145.5/mt CFR NEA, and closing prices were stabilized at $1,034.5-1,036.5/mt CFR SEA. The downstream products’ prices of ethylene were weak. The inventory level at ethylene buyers was high, so their buying interests were low. Some ethylene units were entering into the state of maintenance, depressing the market trading atmosphere. It is learnt that the 190kt/a ethylene unit at Singapore Exxon plant was under the state of annual inspection.

China Polyethylene Market ReviewThe Chinese PE prices were mixed this week. Early in the week, the LLDPE futures ran at low level, depressing the market trading atmosphere. Some petrochemical companies adjusted the ex-works prices down, and the traders followed. While the LDPE prices were lifted due to the short supply because of the turnarounds. As of March 23, mainstream LLDPE offers slipped by RMB 150/mt. The LDPE offers rose by RMB 200/mt. The HDPE offers were fluctuated within the range of RMB 50-150/mt. The dealing prices were based on negotiation.

Chine PE Market ForecastSupply: In the next week, the 60kt/a old FDPE unit at PetroChina Lanzhou Petrochemical keeps in maintenance. The 140kt/a LDPE unit at Sinopec Qilu Company keeps in maintenance in April due to the compressor failure. The 150kt/a HDPE unit at Shanghai Jinfei Petrochemical will be restarted on April 10. The MTO unit at Sinopec Zhongyuan Petrochemical keeps in maintenance. The 1PE unit at Sinopec Shanghai Petrochemical is planned to be overhauled from April 6. The expect decrease in supply will be 8kt. The import volume in April is expected to decrease M-O-M, due to the low buying interest at PE traders because the spot PE prices were low after the Spring Festival holiday but the internationalPE prices were high.Demand: In terms of the agricultural film, the operating rates at mulch film factories gradually decrease in line with the declined mulch film demand. The mulch factories purchased the raw materials based on the need.

To sum up, the upstream crude oil market performed well in recently, and the crude futures prices might go upward. In terms of the supply side, the inventory level at petrochemical companies, ports and traders was still high, but that at downstream factories was low. There will be intensive turnarounds of PE units at petrochemical companies in April, so the market supply should become tighter. But considering about the soft demand for PE at downstream markets, the market supply is expected to be sufficient. The ex-works prices at petrochemical companies are expected to be stable at the beginning of April. SCI holds that the PE market will be range bound next week.

China Styrene Market ReviewEast China: Suppliers cut their selling prices of styrene this week, dragged down by the benzene price decreases. However, later the international benzene market price strongly rallied, due to the higher demand caused by the restart of styrene units at European and U.S. Companies. The Chinese benzene market also slowly went higher. The demand for delivery in late March as well as short covering canceled out the high stock level of styrene at ports. The styrene market fluctuated upward as a result. As for styrene units, Shuangliang Group shut down one of its styrene producing lines for scheduled maintenance on March 20, lasting for 45 days. South China: The styrene market in South China first decreased and then regained ground this week. Market offers for styrene fell to new lows for 2017, dragged down by local traders’ strong selling intentions and the downtrend in the East China styrene market. Later the South China market followed the uptrend seen in the East China. However, there was lack of procurement. Some spot styrene resources were transported from South China to Fujian. On March 29, styrene inventories at the ports in South China decreased 8.3kt to 45.9kt, and the volume of spot commodity for sale decreased 5.1kt to 23.3kt.